Thursday, September 19, 2013

Market Watch: An Unexpected Outcome [September, 2013]

Today, the Philippines, including many markets all over the world, is enjoying hefty gains from an unexpected turn of events when U.S. Fed deferred tapering its stimulus program. As of writing, the Philippine stock market is up > 3%, the reason being, that the tapering has been priced in even before it was implemented. Now that it has been postponed, the market adjusts accordingly (in this case, it goes up).

If you have followed the advice from Pesobility's previous entry to buy your favorites below 6100 PSEi, then you should now be reaping your rewards. However, when to sell is completely up to you. Sell now, wait a little more or hold for long term? It will depend on your personality and risk appetite.

What now?

It is most likely that today is an overreaction to the news, so we might expect a minor correction in the following days. The QE tapering is just deferred and no one knows when it will be implemented, but the estimate is it will still be this year so we need to be vigilant about it. In my personal opinion, the general trend is now upwards upto 4th quarter this year (unless there's another crisis).

Before today, you should have something in your portfolio, I wouldn't advice buying today and going with the flow. My personal take is that I will continue what I already have now that the market can now breathe a little easier. I'm still betting that the Philippine Stock Market will rally in 4th quarter to reach my target 6800 points. And when 6800 points has been reached, my strategy will then depend on what's happening. If our market skyrockets beyond 7000 this year then I might probably sell because we are now again in the high P/E levels. But that's just my personal opinion. Don't take my word for it; I urge you to do your own research.

Market Watch is a free market assessment from Pesobility. It tries to explain why the stock market or the bond market is up or down, the factors affecting the trend, and a recommended plan of action.